The Strategy Page: Presidential Economics Edition

At a glance:

1. How our government crafts #economic policies

2. Environmental regulations (#EPA policies)

3. Healthcare regulations (#AffordableCareAct)

4. Financial regulations (Dodd-Frank Act)

5. Labor regulations (Department of Labor)

6. Immigration policies (Department of Homeland Security)

7. Forbes: Future-Readying Your #Workforce

8. Strategy Brief Video: #ProductDifferentiation

As the election approaches, many are speculating about the economic policies a new administration might bring. Like quarterbacks in a football game, U.S. presidents often receive more credit or blame for economic outcomes than they truly deserve.

Our economy moves like a cruise ship. Economic growth tends to proceed at a steady pace, regardless of who’s in the Oval Office. It’s fascinating that GDP growth has been so consistent even as the Fed manipulated interest rates, inflation and job growth.

The party controlling the Senate and the House also plays a role in shaping economic policy. Consider how we attribute deficit spending to administrations. In reality, Congress holds the power of the purse, meaning it’s responsible for spending decisions. While presidents propose budgets, these are subject to intense negotiations and revisions before Congressional approval.

A notable exception to this trend occurred during Obama’s first term, when both the presidency and Congress were under democratic control for a complete term. This period saw the passage of major legislation like the Affordable Care Act (commonly known as Obamacare). The impact of this law is debated, with different viewpoints on its effectiveness and legacy. Following Obama, the political pendulum swung back under Trump, who sought to reverse policies his constituents viewed as extreme.

Judging politicians solely by economic results can be misleading, particularly when unexpected events—such as the 2008 financial crisis or the COVID-19 pandemic—occur. Biden’s administration, for instance, benefited from two years of democratic control of Congress, which allowed it to pass various stimulus measures. However, even with party control, passing major bills can be challenging (as seen in the difficulties Biden faced advancing his Build Back Better plan due to dissent within his own party).

For perspective, history suggests that the electorate prefers a divided government, splitting control between the presidency and Congress.?If we were to place a bet, it would be that this will happen again. This tendency reflects a desire for balance and oversight, which shape how effectively economic policies are implemented and adjusted over time.

How our government crafts economic policies

Economic policymaking in the United States is a complex process involving multiple entities, including Congress, the executive branch and regulatory agencies. Each player has a distinct role that shapes the country’s economic landscape.

A key difference in the House and Senate is that that House members are seen as more “accountable” given their shorter terms. The House, with its focus on representing the population’s interests, often initiates revenue-related bills such as tax legislation. The Senate is more focused on developing long-term policy.

Both chambers utilize specialized committees, like the House Ways and Means Committee and the Senate Committee on Finance.

The?executive branch, led by the president, sets the tone for economic policy through budget proposals and legislative recommendations. Federal agencies under the executive umbrella, such as the Department of the Treasury and the Office of Management and Budget, are instrumental in implementing these policies.

However, the balance of power in economic policymaking could be significantly altered by changes to?Chevron deference.?The recent Supreme Court ruling will reverse years of regulatory precedent.

Here are some potential economic policy shifts in the months and years ahead:

1. Environmental regulations (EPA policies)

Clean Air Act and Clean Water Act:?The Environmental Protection Agency (EPA) has used Chevron deference to justify its interpretations of ambiguous terms within these acts. For example, under the Obama administration, the EPA issued the Clean Power Plan, which aimed to reduce carbon emissions from power plants. The plan relied on a broad interpretation of the EPA’s authority under the Clean Air Act. Without Chevron deference, such interpretations could face more rigorous scrutiny, potentially limiting the EPA’s ability to regulate emissions and enforce environmental protections.

2. Healthcare regulations (Affordable Care Act)

Medicaid expansion and insurance coverage requirements:?The Department of Health and Human Services (HHS) uses its interpretative authority to implement and enforce provisions of the Affordable Care Act (ACA). Chevron deference has allowed HHS to navigate ambiguities in the ACA, such as requirements for Medicaid expansion and the specifics of health insurance coverage standards. A reduction in deference could lead to challenges against how these policies are enforced, possibly restricting the scope of healthcare regulations.

3. Financial regulations (Dodd-Frank Act)

Consumer Financial Protection Bureau (CFPB) rules:?The CFPB, established by the Dodd-Frank Act, enforces consumer protection laws related to financial products. The CFPB has often used Chevron deference to justify its regulatory actions and interpretations of complex financial statutes. Weakening Chevron deference could result in more successful legal challenges against CFPB regulations, potentially impacting rules on mortgage lending, credit card practices, and consumer rights protections.

4. Labor regulations (Department of Labor)

Overtime and minimum wage rules:?The Department of Labor (DOL) sets rules on issues like overtime pay, minimum wage, and worker safety. Chevron deference allows the DOL to interpret labor laws flexibly. For example, changes to the definition of “overtime” and “employee” versus “independent contractor” statuses could face stricter court scrutiny, impacting millions of workers and employers.

5. Immigration policies (Department of Homeland Security)

Asylum and deportation procedures:?Immigration and Customs Enforcement (ICE) and U.S. Citizenship and Immigration Services (USCIS), under the Department of Homeland Security, use administrative discretion to interpret immigration laws. Chevron deference has supported broad agency interpretations of statutes governing asylum eligibility and deportation proceedings. Weakening Chevron deference could restrict the agency’s ability to adaptively manage immigration policies and respond to changing circumstances.

By Marc Emmer for Forbes: Future-Readying Your Workforce

Yogi Berra once said, “The future ain’t what it used to be.”

In the past four years, labor markets have experienced unprecedented volatility. The methods companies use to hire, train, develop and retain talent are rapidly evolving. Amid a cooling job market and a shift toward hybrid work, employers are rethinking their approach to attracting talent. Here’s how to stay ahead.

Read more

Strategy Brief Video by Marc Emmer: Product Differentiation

The Strategy Experts

Marc Emmer ?is President and Chief Strategist & Facilitator at Optimize Inc. He is an author, speaker and consultant recognized as a thought leader throughout North America as an expert in strategic planning.

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